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A good problem to have.... Too many people interested in a rental

Investor from Chester Springs, PA

posted 5 months ago

Houston we have a problem. We recently listed a property that we rehabbed as a BRRRR deal. I listed just yesterday afternoon and have received atleast 20 contacts regarding seeing the property. I researched the area well and listed the property for a good market rent, but now I'm thinking I should have listed it for more. If I have multiple people vying for this property, is it legal to increase the asking price for the rent the same way you would do with a sale?

Yes you have listed it too low and you would be best to remove the listing and relist at much higher rate so that you can reduce it later if necessary. Wait a week or so before relisting and put it back on the market available for December 1st. It is now way too late to get quality tenants for November.

Simply inform all interested parties that there was a error in the listing and it is being withdrawn.

Investor from Chester Springs, PA

Rental Property Investor from Ankeny, IA

replied 5 months ago

You're going to lose Novembers rent so you can list for higher? And what if December in PA doesn't show that much interest? How much higher? $100? $200? It better be enough to cover for a month of not having a tenant. Give us some numbers, as that is the only way I could give a full opinion. If it's $50, then pick the best tenant out of the 20 and roll with it. Then be prepared to raise the rent to market rate at the next lease signing. You could always go 6 month lease at first and then raise it around May. Maybe you're getting 20 inquiries because it is priced perfect.

from Cody, WY

replied 5 months ago

It could be you listed it too low. It could be the way you've advertised it and you're just getting a bunch of lookers that aren't seriously interested. When I first started managing rentals, I would get 10-15 calls in the first couple of days. Once I announced that I would require an application fee and run credit/criminal background checks, the calls dropped to a few a week.

Rental Property Investor from Houston, TX

replied 5 months ago

@Marlon Long it also could be that you asking price is the only one where investors could get a sensible return compare to most of the folks who thinks 3%-5% is acceptable return and jack up the price as such.

Rental Property Investor from Northeast, TN

replied 5 months ago

If you did your research and priced it accordingly, I wouldn't use contacts from new on the market as any kind of gauge. If you get 20 contacts, 15 of them come look, and half of them apply, you may have set the price low for the market. Otherwise, I don't think you have enough information to change your price. If you pull it and go back up, you may be back here in a week asking if you should drop the price.

Also, as noted, what do you think might be "too low" in real dollars? You listed it at $1k and think it should have been $1500? Or you listed it at $750 and think it should have been $800?

Rental Property Investor from San Diego, Ca

Houston we have a problem. We recently listed a property that we rehabbed as a BRRRR deal. I listed just yesterday afternoon and have received atleast 20 contacts regarding seeing the property. I researched the area well and listed the property for a good market rent, but now I'm thinking I should have listed it for more. If I have multiple people vying for this property, is it legal to increase the asking price for the rent the same way you would do with a sale?

Thanks for the responses in advance.

Take the best person (& looking to move in the quickest). One month of downtown = a big rent increase needed to make up for it. If you think you leased it too low -- raise it at rewneal time. Or tell anyone looking to move in right away that you can only do a 6 month lease and see if someone is still willing -- and raise them earlier than a year.

But no, it's not illegal to list something for $x, then say "We had a lot of interest and realize we offered it too low. If you'd like it for $y we'd be happy to lease to you" and see who bites. But I'd do my first suggestion instead.

Investor from Prairieville, Louisiana

I think it may be too soon to determine that. Normally, we get a lot of requests via the internet on the first few days of a listing. Also, one issue that I see is that a lot of people will click the "I'm interested button on 20 or 30 properties. Then if you get them on the phone they will tell you "Oh I clicked on so many properties, which one was it?"

Then that brings up the point that when you try to contact many of them, they never respond back. I think the anonymity of the internet has caused this as well as the overall flakiness of people. On my last vacancy, I had over 50 contacts. Due to the aforementioned issues, after reaching out to each one 3 times each, we converted these leads to about 8 appointments, where we had 4 no shows. So it was only about 8 percent conversion to appointment. We ended up renting to someone who called off the yard sign. A lot of other landlords confirmed that this is the norm for them. Further, real estate agents told me they have the same issue when listing a house.

Try doing a rent survey in the meantime to actually determine if you are under market on rental amount.

Investor from Narragansett, Rhode Island

replied 5 months ago

You can raise it but I wouldn't. Inquiries are not applicants. It could be you are the only house it that range, it could be that everyone wants to look now before the Nov/Dec holidays. Show it and gauge interest and applicant quality. Some properties are priced correctly but just get lots of lookers who aren't serious about moving.

from Houston, Texas

replied 5 months ago

@Marlon Long I would raise the rent, but after your first year is up. (Assuming you are signing a 1 year lease)
Also, I'm looking for my 2nd door in Houston and am planning on BRRRing it. What neighborhood is your property in? Also, what did you put in your description that made this property so appealing?
Either way, bravo sir!

Rental Property Investor from Northeast, TN

I think it may be too soon to determine that. Normally, we get a lot of requests via the internet on the first few days of a listing. Also, one issue that I see is that a lot of people will click the "I'm interested button on 20 or 30 properties. Then if you get them on the phone they will tell you "Oh I clicked on so many properties, which one was it?"

Then that brings up the point that when you try to contact many of them, they never respond back. I think the anonymity of the internet has caused this as well as the overall flakiness of people. On my last vacancy, I had over 50 contacts. Due to the aforementioned issues, after reaching out to each one 3 times each, we converted these leads to about 8 appointments, where we had 4 no shows. So it was only about 8 percent conversion to appointment. We ended up renting to someone who called off the yard sign. A lot of other landlords confirmed that this is the norm for them. Further, real estate agents told me they have the same issue when listing a house.

Try doing a rent survey in the meantime to actually determine if you are under market on rental amount.

I agree with these figures. Our homes are typically vacant less than one week (our longest non-rehab vacancy in the last 4 years has been 2 weeks). When a house comes up, it will generate about 100 inquiries, 20-25 appointments, 10-15 showings (about a 50% flake factor!) and several applications. That's a 10-15% conversion rate.

Keep in mind that online a 5% conversion rate is considered pretty good.

Investor from Richmond, Virginia

replied 5 months ago

@Marlon Long

Congrats on finishing it up!! 20-30 people/day interest shows you did a great job advertising/marketing it!... that being said, you don't know the quality of those people, or if they will actually come look at it, let alone actually apply. If it's priced lower, it will get bigger interest, but you just don't know the quality until they officially apply. I would suggest, with the ones that seem like strong leads-- send the application link early and let them know there has been really heavy interest.

True story-- on one of our last open houses-- the cops came by because there was too much activity (15-20 people?), but in that open house-- we only got 3 applications-- a lot of people didn't realize we were serious about our qualifications/standards.

Real Estate Agent from Southington, CT

replied 5 months ago

Have you pre-screened all of the people who have inquired? 20 inquiries will almost certainly not lead to 20 people who pass your minimum screening setting up a showing and actually attending the showing.

Rental Property Investor from Jacksonville, FL

replied 5 months ago

@Marlon Long I saw show the properties first and see who applies for it. We had a good amount of people come see our rental when it was first listed and only one applied for it after a few weeks. If everyone applies for it and they are all qualified then maybe you are able to tell them all you have X number of qualified applicants and are raising the rent to X amount, then see who takes it. Just make sure you tell them all the same thing so that you won't get in trouble legally.

Investor from Poway, CA

Houston we have a problem. We recently listed a property that we rehabbed as a BRRRR deal. I listed just yesterday afternoon and have received atleast 20 contacts regarding seeing the property. I researched the area well and listed the property for a good market rent, but now I'm thinking I should have listed it for more. If I have multiple people vying for this property, is it legal to increase the asking price for the rent the same way you would do with a sale?

Thanks for the responses in advance.

We often get 20-30 contacts for one of our rental listings. About a third show up to actually look at a place and about a third of those submit an application. Under such a scenario, we typically only end up with only 1 or 2 qualified applicants (in a couple hour open house). So I suspect you will only get a few applications of which maybe 50% are qualified and that your list price is not as off as the initial interest may make it appear.

It is easy to express interest in a rental listing. Where it starts getting more costly is when it is time for them to pay the application fee (we charge $25 and keep it only if we process their application). We virtually always have a qualified tenant resulting from the initial open house, but we seldom have more than a few qualified tenants from the original open house and we always have significant initial interest (20 to 40 inquiries).

BTW no matter how much a potential tenant states they like the rental, if we do not get a completed application on the spot we have less than 20% chance of getting the completed application. Encourage people to apply while at the open house; if they take the application with them the odds reduce significantly of getting the completed application.

Investor from Chester Springs, PA

replied 5 months ago

@David S. Thats a great point. the internet provides the anonymity at no cost to them. Showing is saturday and quite a few people i expect to show. but the proof will be in the applications received. (with application fee attached).

Rental Property Investor from Oklahoma City, OK

replied 5 months ago

While you can theoretically raise the rent, you might very well be better off to look at a 20 applicant pool as a wonderful thing and carefully select a high-quality, long-term tenant at your current price. Best wishes in whatever decision you make.

Investor from Chester Springs, PA

replied 5 months ago

@Victor Mondragon this BRRR is in a working class neighborhood, and we updated the key rooms, (kitchen, bathrooms) Updated lighting and flooring. it was actually a really quick flip. its the second one we have done in this area. We took nice bright pictures and listed it as potential Rent-to-own. I think that helped alot. I have relationships with mortgage brokers and will set up my potential tenant with a broker to evaluate their financial situation to get them ready to purchase in 2-3 years.

Investor from Richmond, Virginia

Also-- when you have names through emails/profiles, you can check the general district court website to see if they have any evictions!

In VA, it's really easy and a great way to pre-screen people, it's like getting a public background check. I do this often, and that normally gets rid of 50% of the people, and I then focus on emailing/communicating with the ones that could potentially qualify! If you it looks like a good match, get them to send their pay stubs ahead of time too.

If you don't already have a basic email you send to everyone with the details, make one (with qualifications/details/showing time) .. and then enjoy the beauty of copying/pasting!

Rental Property Investor from Sioux Falls, SD

replied 5 months ago

@Marlon Long I have had 20 calls and not a single qualified tenant. You want to get lots of calls and you want multiple applicants. I think you may be getting greedy and could mess this up. Price is a funny thing. You could raise it $200 and get NO calls.

When you screen, look for the person who is willing to take possession the soonest and most qualified. We price properties to move, because holding out for $50 could lose you a full months rent. Not worth it.